Price of soybeans fall in Brazil due to freight

The decline in Australia’s iron ore supply and China’s rising steel output have raised freight rates in Brazil to the Asian country, forcing soy producers to lower the price as soybeans and Brazilian iron ore use same type of ship for export.

“The fact that freight prices rise, and demand is not so aggressive means that although sellers are reluctant to release their soybeans in Brazil, buyers are not in a position to offer a better price,” said Steve Cachia, an analyst Brazilian brokerage Cerealpar.

It is worth noting that Chinese demand for soybeans has decreased as a result of the African swine flu, which has eliminated most of its pigs.

Freights from Santos to northern China rose by US$7/t, to almost US$40/t in August, up more than 20% in two weeks.

With iron ore, grains, and soybeans being shipped on the same type of vessel, the shortage of Capesize vessels (150,000 tons) led the iron ore sellers to buy Panamax vessels.

This, in turn, forced freight rates to rise on the popular East Coast route from South America to northern China and forced the sellers of wheat in the Black Sea to seek ships all the way to the Persian Gulf.

“The market is overheated in the Atlantic. After Vale solved some problems it had with its tailings dams, Brazil’s iron ore exports increased considerably”, said a source from the freight market who declined to be identified.

The following DataLiner graph shows soybeans export trends from Brazil to China from January 2015 to May 2019:

Source: Agri Census

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